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Kobe Steel: “We are extremely sorry for our improper conduct”

“We are extremely sorry for our improper conduct,” says the message on the front page of Kobe Steel’s Website. The scandal that has engulfed the company over falsifying product quality data is clearly uppermost on its mind. The company is facing an investigation by the U.S. Department of Justice, an external investigation prompted by the Japanese government, random lawsuits from Canadian customers owning cars with Kobe steel in them, and now a proposed class-action lawsuit that will be filed in the United States and possibly Japan, by law firm U.S. Market Advisors Law Group.

The biggest question, however, is how a company that already nominally had a culture of compliance with applicable rules and regulations, quality control systems, compliance committees, compliance directors, whistleblowing programs, and internal reporting systems got into this mess. If you have a company that says it already has these processes in place, and then admits that it has not complied with any...

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